is a result
of the heterogeneous consumption behavior due to the diversification
and specialization of consumers' needs. Considering this, the market
can not be defined as a global, undifferentiated entity, but as one
structured by various groups of consumers or users.
The process of market segmentation
involves the division of a market in subgroups of consumers with
specific requirements and preferences, who represent a demand big
enough to justify distinct marketing strategies. Therefore, market
segmentation divides the market in similar groups of consumers when
it comes to their features or shopping habits.
The market segmentation requires a
process involving the following stages:
- Identifying the segmentation criteria
- Formation and description of the resulted segments
- Evaluation of each segment from the company's perspective
- Selection of one or more market segments that will become
the target market for the company.
The criteria considered for market
segmentation are the variables that create differences in market
members' behavior. So, the identification of those criteria should
consider, first of all, the structure of the market(individuals,
companies) and then the main variables that define the members of the
There can be defined different criteria
for different markets, like final consumers' market and business
market(constituted by companies only).
Final consumers' market –
The market of final consumers is
constituted by individuals, members of a population located in a
certain geographical area, who purchase the products for consumption
or use, not for re-selling. The variables that can be considered for
the market segmentation focus on the basic features of the
Business market – segmentation
- Demographic variables: age, gender, ethnicity, profession,
size of household, income, education, religion.
- Geographic variables: region, climate, lifestyle,
- Psychological variables: social status, personality,
- Behavioral variables: consumption rate, expected benefit,
brand loyalty, price elasticity.
The business market comprises companies
that purchase various goods and services in order to process, sell or
rent for profit. The main feature of this market is that its members,
both the demand and the supply, are companies. Thus, the segmentation
variables are features that define a company:
- Geographic location – local, national or international
- Activity segment – industry, services, construction,
- Company size – small, medium, big companies.
- Behavioral variables – purchasing frequency, level of
purchasing centralization, suppliers selection process.
Considering the identified segmentation
variables, the division can be made considering one or more of these
Market strategies concerning
After the identification of market
segments considering the various criteria, the company can adopt one
of the following market strategies:
- Concentrated market strategy – focused on only one market
- Differentiated market strategy – focused on more or all
market segment, with marketing actions specific to each segment.
- Undifferentiated market strategy – focuses on all market
segments with the same market actions. It is applicable when the demand
is uniform and there are no differences between the market segments.